Tuesday, December 19, 2006

Learning how to trade again

This morning has not been kind to me again. Even with my small positions I lost around $90. I was worried that today might turn into a repeat of yesterday. Yesterday I started out with a small loss of around $100 which fattened into a $400 loss. I kept trying to recover lost money and ended up making a lot of bad trading decisions. Today I really checked myself when I went into a trade. I found two trades that brought me back to the plus side. I am up $55 today.

I have noticed a lot of slippage with my market orders and stops when I trade hybrid stocks. There are so many hybrid stocks now I probably trade some everyday. I can recognize hybrids by their speedy execution. I find it a lot more difficult in reading these stocks. I am always a split second too slow with my market orders. When I try to get in at a break of a level and miss I get spread up 5-10 cents at a time. Then the stock trades back down again or even below the level of the breakout. I have been trading poorly lately and I seem to be hesitating when I make trades. When I miss a move I start chasing and end up getting chopped around.

I have some ideas on overcoming this problem. I am going to wait for the stock to come to me. I will look for levels of support or resistance and enter my positions. I need to take smaller positions, use wider stops, and go for bigger rewards. It sucks to change my style but if my recent performance is a start of a trend then I got to do it.

3 comments:

I never use market orders. If I want a stock, I short at the bid and buy at the ask. I used to offer a few pennies better than the current bid/ask. I stopped even that because I do often get fills at my worse than market price.

I like using market orders because I want too see where I get filled. When I want to go long and the stock is strong I should get filled near the offer. If I get filled near the bid that tells me the stock is weak. Now with the hybrid it doesn't seem to matter anymore.

About Me

I have been trading for 5 years. It took close to a year before I became profitable. I find that I am improving gradually each year.
My method of choice is scalping. My edge lies in tape reading NYSE stocks and staying on the side of the specialist. That is the method I learned when I started. As I build up my capital I will try new styles and trade new markets.
In late 2006 my trading hit a rough patch after the introduction of the NYSE Hybrid system. For most of 2007, I have been on a search for new strategies that would help me adapt to the market.